XRP soaring all the way: why zero venture capital, no smart contracts, and low user base have achieved a market capitalization of $180 billion?

The logic of the market is never wrong.

Written by: goodalexander

Compiled by: Deep Tide TechFlow

Why does XRP make people's "brains short-circuit"?

In the field of Crypto Assets, the existence of XRP has subverted many traditional narratives, especially the mainstream views on venture capital (VC) and protocol value.

The initial view was that "venture capital tends to dumping, so choosing Meme coin is a strategy against venture capital." However, this view is gradually being overturned. It turns out that what can really resist venture capital is not Meme coin, but those protocols with stable cash flow, as well as long-term protocols based in the United States (usually referred to as "Dino coins").

First, Hyperliquid demonstrated how cash flow-driven startups can achieve success through community distribution. Jeff initially supported the project with his own trading funds, proving that it is possible to establish a community-oriented distribution model without relying on venture capital support.

Secondly, XRP further demonstrates the reliability of CryptocurrencyWhale in following the protocol, which is closely related to the existence time of the protocol. The case of XRP challenges the core assumptions of venture capital, and the following points in particular make it unacceptable for venture capital:

• No Venture Capital Exposure: XRP has received little to no investment from venture capitalists, so they are unable to profit from it.
• Lack of smart contract technology: XRP does not rely on smart contracts, which goes against the technical logic of most venture capital investments.
• Contradiction between user quantity and value: XRP only has 20,000 active sending Wallets, but it has a market capitalization of up to $180 billion, which is completely opposite to the traditional view that 'protocol value requires a large number of user support'.
• Focus on transaction sending: The core function of XRP is to send transactions, and the efficiency of this single function makes other multi-functional protocols pale in comparison.

The 'Shen Candle' Event of XRP/SOL and the Regulatory Warning

The 'God Candle' event of XRP/SOL (i.e., a sudden big pump in price) occurred at the same time as incidents of human exploitation, human trafficking, and attempted suicide in the Pump.fun live broadcast. These incidents have prompted people to reflect: when a protocol has a large number of users but lacks a review mechanism, it may lead to extremely negative consequences, including the proliferation of illegal activities and the worsening of social problems. This situation will eventually attract the attention of regulatory agencies or law enforcement departments.

This leads to another controversial feature of XRP: Trust Lines. Trust lines require users to establish a trust relationship before accepting a certain Token. This means that users cannot arbitrarily send 'racist Tokens' or other unpopular Tokens to any Address. Although this design has been criticized for its 'high friction' user experience (UX), it effectively prevents low-quality usage while meeting the needs of high-quality users (such as banks). As the market gradually recognizes the problems that may arise without these security measures, this mechanism is being increasingly accepted.

BTC (BTC) has little application in such scenarios, but its performance still far surpasses Ethereum (ETH), even though the latter claims to "drive Web3". This is the initial stage of market changes, but the live event of SOL has truly demonstrated what "mass adoption beyond purchase" looks like and raised awareness of the importance of Compliance.

Another important change is that since Trump was elected, the radical law enforcement system has actually ended. This has transformed the US-based protocol from facing survival risks to being in a state protected by 'the Navy'. Any attempt to review the actions of Ripple Labs may face strong obstacles from the US government.

XRP's biggest risk was once that the U.S. government might accuse its only Node list (UNL) of being involved in fund transfers and impose OFAC fines, while the SEC sued each validators to force Compliance. However, as the regulatory environment changes, these risks are gradually turning into advantages for XRP.

Protocols with similar risks (such as Cardano and XLM) have therefore taken more proactive actions. Today, the regulatory environment in the United States sees them as important tools against censorship.

Additionally, the special status of the United States in the global financial system has also had an impact on this trend. The United States is one of the centers of global anonymous cash, as it is difficult for other countries to enforce reporting requirements on US Financial Institutions. Tether can be seen as an on-chain extension of this logic—a semi-Compliance cash reserve pool with a scale of up to 135 billion US dollars. As long as these assets are denominated in US dollars, the US government will not be concerned about reporting requirements from other countries. This is also the reason behind Tether's business closure in Europe.

The United States hopes to strengthen the global dominance of the dollar through financial innovation in the Cryptocurrency field. As a result, the development of XRP has shifted from being 'marginalized' to being part of the US government's policy.

Despite the recent Fluctuation in the price of XRP being attributed to retail investor activity by some, in reality, especially for long-standing coins, their holdings are highly concentrated. Most Whales in the network are not dumping at the current price, although the Liquidity in the market fully allows them to do so. This indicates their continued confidence in the future of XRP, which stems from the aforementioned multiple factors.

The logic of the market is never wrong, our task is to understand it as much as possible and learn from it.